Market Movers ahead
- We are heading for a very quiet week with no big movers in the US or Europe. In the UK, Brexit negotiations will continue on Thursday.
- China is due to release inflation and FX reserves data. We look for PPI inflation to stay high for now at 6.9% before heading lower next year. We expect CPI inflation to stay subdued at 1.7%.
- Japanese wage numbers will be interesting to watch. Wage growth has so far stayed low despite the strongest labour market in more than 20 years.
- In Sweden, the most important release will be the Riksbank minutes and Prospera inflation expectations.
- We estimate Norwegian core inflation rose slightly to 1.1% in October from 1.0% in September.
Global macro and market themes
- Volatility has continued to fall as central bank predictability is considered high and the macroeconomic outlook looks increasingly stable. We argue it bodes well for continued focus on ‘carry’ and ‘hunt for yield’.
- ‘Hunt for yield’, ECB QE and a solid budget surplus also mitigate the upside pressure on German long yields from the macro economy.
- The IMF warns ‘financial products tied to equity volatility [bought] by investors such as pension funds are creating unknown risks that could result in severe shock to financial markets’.
